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On February 12, the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) (collectively the three European Supervisory Authorities (three ESAs)) published a joint warning to consumers relating to the high risks of buying and/or holding virtual currencies (such as Bitcoin, Ether and Ripple).
Continue Reading Warning to Consumers on Virtual Currency Risks Issued by EBA, EIOPA and ESMA

On December 6, the Breach of Union Law Panel of the European Banking Authority (EBA) published a press release relating to a breach of European Union (EU) law (BUL) investigation against the Dutch central bank, De Nederlandsche Bank (DNB), relating to the latter’s prudential framework for proprietary traders.

Since January 2014, the DNB had designated investment firms licensed to perform the investment activity of proprietary trading (that is, dealing on own account) with the status of “local firms”, according to the DNB’s interpretation of Article 4(1)(4) of the Capital Requirements Regulation (CRR). This therefore exempted such firms from the scope of the EU’s framework of capital requirements under the CRR (including, significantly, the bonus cap rules (restricting bonuses to no more than 2 x the individual’s salary), which apply to banks and investment firms subject to the CRR). Instead, the DNB had historically imposed a national framework of capital requirements that reflected the risk exposure of the relevant firms—and exempted Dutch “local firms” from the bonus cap.
Continue Reading EBA Closes Breach of EU Law Investigation Relating to Dutch Prudential Regime for Proprietary Traders

On October 3, the European Banking Authority (EBA) published a compliance table (Compliance Table) in relation to the EBA’s guidelines (Guidelines) on sound remuneration policies under the EU Capital Requirements Directive IV (CRD IV) and disclosures under Capital Requirements Regulation (CRR). The Compliance Table shows that the relevant competent authorities of Denmark, Germany, France, Slovakia,…

On February 29, the Bank of England and Financial Conduct Authority (FCA) published separate press releases in relation to the implementation of the European Union’s fourth Capital Requirements Directive (CRD IV). The press releases confirm that the Prudential Regulation Authority (PRA) and FCA have informed the European Banking Authority (EBA) that they will not apply the CRD IV “bonus cap” to smaller firms.
Continue Reading FCA and PRA Confirm That Bonus Cap Will Not Apply to Smaller Firms

The EU Capital Requirements Directive (CRD) went into effect on January 1, 2014. The CRD introduced what is commonly referred to in the European Union as a “bonus cap” on individual variable remuneration when paid to employees by EU banks and investment firms. Under the CRD, variable remuneration for such individuals is required to be capped at 100 percent of the relevant individual’s fixed remuneration (i.e., a ratio of 1:1 for salary to bonus), or at 200 percent if shareholder approval is obtained (i.e., a ratio of salary to bonus at 1:2).
Continue Reading EU Bonus Cap: EBA Publishes Guidelines on Sound Remuneration Policies and Separate Opinion on Proportionality