Pillar 3 disclosure requirements for banking remuneration - consultative document

FINANCIAL SERVICES

Pillar 3 disclosure requirements for banking remuneration - consultative document

The Basel Committee on Banking Supervision has issued a consultative document outlining the key aspects of remuneration to be disclosed by financial service firms.

Banks will be requested to disclose qualitative and quantitative information about their remuneration practices and policies covering the following:

• governance/committee structures

• design/operation of remuneration structure, frequency of review
  

• independence of remuneration for risk/compliance staff
  

• risk adjustment methodologies
  

• link between remuneration and performance
  

• long-term performance measures (deferral, malus, clawback)
  

• types of remuneration (cash/equity, fixed/variable).
  

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The consultative document says: “The objective of these additional Pillar 3 requirements on remuneration is to support an effective market discipline and to allow market participants to assess the quality of the compensation practices. These requirements should also contribute to promote a greater convergence and consistency of disclosure on remuneration.”

It adds: “The Committee's proposed Pillar 3 disclosure requirements on remuneration add greater specificity to the disclosure guidance on this topic that was included in the supplemental Pillar 2 guidance issued by the Committee in July 2009.”

The proposals cover the main components of "sound remuneration practices" and take full account of the Financial Stability Board's Principles for Sound Compensation Practices (downloads PDF) and their related Implementation Standards (downloads PDF).

Consultation

The Basel Committee welcomes comments on this consultative document. Comments should be submitted by Friday, 25 February 2011 to:
Email: baselcommittee@bis.org
Post: Secretariat of the Basel Committee on Banking Supervision, Bank for International Settlements, CH-4002 Basel, Switzerland.

All comments may be published on the BIS (Bank for International Settlements) web site unless a commenter specifically requests confidential treatment.

Want to know more?

Title: Pillar 3 Disclosure Requirements for Remuneration, Consultation document, Basel Committee on Banking Supervision, December 2010.

Availability: Download the 12-page consultation document in PDF format at www.bis.org/publ/bcbs191.htm.

The Bank for International Settlements (BIS) is an international organisation which “fosters international monetary and financial co-operation and serves as a bank for central banks”. Established in 1930, the BIS is the world's oldest international financial organisation. For more details visit www.bis.org.