28 April 2017

New rules on the remuneration policy for risk takers in banks - implementation of CRD IV comes into force on 1 May 2017.

On 1 May 2017, the Regulations of the Minister of Development and Finance of 6 March 2017 on the risk management and internal control system, remuneration policy and the method of estimating internal capital in banks (Regulations), which implements CRD IV, enter into force.

Subject scope

Banks within the meaning of the Act of 29 August 1997 Banking Law.

Responsibilities of the bank

Banks are obliged to:

  • create and maintain a list of persons whose professional activities have a material impact on the bank's risk profile (Risk Takers);
  • adopt a remuneration policy supporting proper and effective risk management, defining fixed and variable components of remuneration for Risk Takers.

As regards members of the supervisory board, banks are not required to divide remuneration into fixed and variable components and apply the provisions of the Regulations regarding variable pay.

Variable remuneration

The Regulations lay down the basic principles relating to the structure of variable remuneration of Risk Takers. In comparison with KNF resolution No. 258/2011 of 4 October 2011, the Regulations include the following new rules:

  • the components of variable remuneration cannot exceed 100% of the components of fixed remuneration,
  • the bank may apply a higher maximum ratio of components of variable remuneration to components of fixed remuneration, but not higher than 200%, with the approval of the shareholders’ meeting, meeting of representatives or the supervisory board in the case of a state bank, using a special procedure regulated by the Regulations,
  • welcome bonuses constitute a variable remuneration and are subject to the principles set forth in the remuneration policy.

We recommend that banks review their current remuneration policies to align them with the requirements of the Regulations.

We include a link to the EBA guidelines on sound remuneration policies.

Paweł Krzykowski
Advocate, Poland pawel.krzykowski@allenovery.com

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