The European Banking Authority (EBA) has today published data relating to “high-earners” in 2012 (individuals who earn over EUR 1 million), which comes ahead of the implementation of bonus capping requirements to be introduced under CRD IV.

Jon Terry, partner in PwC’s reward team, said: “The data highlights how the UK is going to be disproportionately hit by the bonus cap. The UK has by far the highest number of high earners, with over 2000 people earning over EUR 1 million. This is almost thirteen times higher than Germany, which has the second largest population of high earners with over 200 people. “Financial institutions in the majority of member states will need to make substantial changes to how they structure pay for their senior employees as over half have people whose current pay structures exceed the maximum bonus cap. UK financial institutions in particular will need to review pay structures in light of the bonus cap as the current average ratio of variable pay to fixed pay is 370 percent.

“Identified staff make up only roughly half of total high earners in the UK, the lowest proportion of any member state. But based on this data alone, the number of people in the UK who will be subject to the bonus cap could more than double if the EBA's proposals to expand the 'material risk takers' to all those with total compensation in excess of EUR 500,000 is implemented. “The EBA’s data leaves no doubt that the UK will feel the fullest force of the bonus capping provisions compared with all other Member States. Banks have a major challenge as to how they will reward their staff. Bringing more people into the stringent pay rules again further widens the gap between pay practices in Europe and the rest of the world.”