CRD IV remuneration requirements

Article

CRD IV remuneration requirements

A burden for financial institutions and HR

Today’s evolving remuneration requirements have major implications for the cost structures of financial institutions as they work to ensure full compliance.

Executive Summary

Ever since the financial crisis, credit institutions within Europe have faced increasing regulatory pressures at almost every level of their operations. More than mere restrictions on operations, regulations affect the way remuneration is to be delivered to the workforce of financial institutions. With the introduction of CRD III (Directive 2010/76/EU) and now CRD IV (Directive 2013/36/EU), the European Union is attempting to reduce excessive and imprudent risk taking within financial institutions fueled by inappropriate remuneration practices. Regulators believe that poorly designed remuneration structures may have negative effects on the sound management of risk, the control of risk and above all the risk-taking behavior of given individuals. Today’s evolving remuneration requirements have major implications for the cost structures of financial institutions as they work to ensure full compliance. Indeed, remuneration requirements under CRD IV not only affect individuals themselves, but also have major consequences for the entire remuneration and benefits processes. This will also have an impact on talent and HR as a whole.

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Inside Magazine issue 12, June 2016

Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.

Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).

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