The investigation found that 39 banks across the 28 EU member states are using ‘role-based’ allowances, classified as fixed remuneration.
This violated the EU Capital Requirements Directive (CRD IV).
EBA said in a statement: "If role-based allowances are discretionary, not predetermined, not transparent, not permanent, or revocable, they should not be considered as fixed remuneration but should be classified as variable in line with CRD IV."
The watchdog told the financial institutions to change their remuneration policies by 31 December.
Banks such as Barclays, HSBC, Royal Bank of Scotland and Goldman Sachs, among others, are expected to be affected with the ruling and would have to change their allowance schemes.
The EU’s bonus cap came into effect at the start of this year. The rule limits the bonus paid to the top management of the banks to 100% of their fixed pay or to 200% if approved by the shareholders.
Image: EBA finds banks violate EU bonus cap rule. Photo: courtesy of Stuart Miles / FreeDigitalPhotos.net.
