The number of high earners in EU banks increased by 21.6% in 2014, according to a report on remuneration practices published by the European Banking Authority. The main reason for the increase, according to the EBA, is the introduction of a new regulatory standard in 2014 which implemented a more accurate requirement on banks to identify those key staff having a material impact on the risk profile of banks.
European banks shifted the remuneration of key staff (known as 'identified staff' in EBA-speak) towards fixed pay in response to the introduction of the so-called bonus cap in 2014, the report also finds. As a result, the average ratio between the variable and fixed elements of identified staff pay fell from 104.27% in 2013 to 65.48% in 2014.
However, the bonus cap, and resulting shift towards fixed pay, did not appear to have any significant impact on banks’ financial stability as fixed pay for these key staff accounted for less than 1% of banks’ total funds.