EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 23 October 2018  
on the rules to be followed by systemically relevant credit institutions when defining fixed 
remuneration policies  
(CON/ 2018/ 44) 
 
Introduction and legal basis  
On 21 September 2018 the European Centra l Bank (ECB) received a request from the Ministry of 
Finance of the Netherlands for an opinion on a law on approval from the Minister f or Finance regarding 
fixed remuneration of directors of systemically relevant credit institutions  (hereinafter  the ‘draft  law’). 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union, as the draft law relates to the ECB’s tasks concerning the prudential 
supervision of credit institutions pursuant to Article 127(6) of the Treaty . In accordance with the first 
sentence of Article  17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion.  
 
1. Purpose  of the draft law  
1.1 The draft law encompasses two elements related to the fixed remuneration of  staff of systemically 
relevant credit institutions . For this purpose, systemically relevant credit institutions include 
essentially those credit institutions which are considered by De Nederlandsche Bank as global or 
other systemically important credit institutions  in accordance with national law transposing Directive 
2013/36/EU  of the European Parliament and of the Council1 2. 
1.2 The first element refines  the definition of ‘basic fixed remuneration’  by stipulat ing that basic fixed 
remuneration must  not consist of shares in a systemically relevant credit institution or other 
financial instruments whose increase in value is partly dependent on an increase in the value of the 
credit institution ’s shares or benefits  associated therewith.  
1.3 The second element i ntroduces a requirement for systemically relevant credit institutions to obtain 
prior approval from the Minister f or Finance for any increase in basic fixed remuneration. In 
particular, any proposal  by the bo dy or individual within the credit institution  responsibl e for 
establishing remuneration, or  to establish the fixed remuneration of a new director or increase the 
                                                 
1  Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of 
credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 
2006/49/EC (OJ L176, 27.6.2013, p. 338).   
2  See Title VII, Chapter 4 of Directive 2013/36/EU on capital buffers and national law transposing those provisions, in 
particular Article 3:62a of the Wet op het financieel toezicht  (‘Financial Supervision Act ’ (FSA)  adopted on 
28 September 2006)  and Articles  105c and 105d of the Besluit Prudentiële regels Wft  (Decree on Prudential  Rules 
FSA, adopted on 12 October 2006) .  
ECB -PUBLIC  
2 fixed remuneration of an existing  director, is to be submitted to the Minister for Finance for his/her 
prior consent.  The Minister must  refuse to c onsent  if he/she deem s the amount of the fixed 
remuneration inappropriate with a view to a cautious, controlled and sustainable remuneration 
policy taking into account the broad consensus that exists wi thin society. More detailed rules 
regarding the appropriateness of the level of any fixed remuneration may be set by means of an  
administrative order.  Furthermore, under or pursuant to such an order, rules may be laid down  with 
regard to the details to be submitted in connection with the Minister’s consent.   
1.4 The explanatory memorandum to the draft law  and the opinion of the Council of State on the draft 
law contain divergent views as to whether the role proposed for the Minister  for Finance  under the 
draft law is consistent with the ECB’s prudential supervisory competence within the framework of 
the single supervisory mechanism (SSM) as set out in Council Regulation (EU) No 1024/20133.  
 
2. Observations   
2.1 Within the framework of the SSM  as set out in Regulat ion (EU) No 1024/2013, the ECB is 
exclusively  competent to carry out, for prudential supervisory purposes, specific tasks in relation to 
all credit institutions established in the participating Member States. One of those tasks consists of 
ensuring compliance with requirements imposed on credit institutions to have in place robust 
governance arrangements , including remuneration policies and practices, as set out in relevant 
Union law4. For the purpose of carrying out the tasks conferred on it by Regulation (EU) 
No 1024/2013, and with the objective of ensuring high standards of supervision, the ECB applies 
all relevant Union law, and where this is composed of d irectives, the national legislation 
transposing those d irectives. In this respect, w hen carrying out  its prudential supervision tasks, the 
ECB is the competent authority within the meaning of Directive 2013/36/EU . Directive 2013/36/EU 
provides that competent authorities must ensure that, when establishing and applying the total 
remuneration policies for categories of staff , credit institutions comply with the principles set out in 
that Directive in a manner and to the extent that is appropriate to their size, internal organisation 
and the nature, scope and complexity of their activities5. 
2.2 The competence granted to the Minister for Finance under  the draft law does  not seem to conflict 
with the ECB’s competence as the competent authority responsible for ensuring compliance with 
the abovementioned  requirement for credit institutions to have in place robust  governance 
arrangements, including remuneration policies and practices. The ECB understands that , in 
exercising his/her  competence under the draft law,  the Minister would  assess the appropriateness 
of a proposed basic fixed remuneration for new or existing directors  on an individual basis with a 
view to a cautious, controlled and sustainable remuneration policy taking into account the broad 
consensus that exists within society.  As long as the Minister does not assess credit institutions’ 
compliance with their  obligation to have in place robust governance arrangements, which falls 
under the ECB ’s competence, this approach does  not seem to conflict with the ECB’s supervisory 
                                                 
3  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).  
4  See Article 4(1)(e) of Regulation (EU) No 1024/2013.  
5  See Article 92 and further of Directive 2013/36/EU.  
ECB -PUBLIC  
3 powers under Regulation (EU) No 1024/2013. In this vein, it has to be avoided that the e ventual  
general administrative order s detailing the rules regarding the appropriateness of the level of 
individual fixed remuneration create a  conflict with the ECB’s  supervisory  powers. As previously 
noted by the ECB , banking legislation adopted by the Member States after the establishment of the 
SSM should facilitate the exercise by the ECB of its responsibilities within the SSM,  including its 
capacity to enhance the consistency of supervision across the euro area. Member States should 
refrain from setting obstacles both to uniform supervisory practice and to the exercise of 
supervisory discretion by the ECB within the SSM6.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 23 October  2018 . 
 
[signed]  
 
The President of the ECB 
Mario DRAGHI  
                                                 
6  See paragraph 2.2 of ECB Opinion CON/2016/53.  All ECB  opinions are published on the E CB’s website at  
www.ecb.europa.eu.