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Cap on variable pay could lead to increased salaries

17 April 2013

Deloitte, the business advisory firm, says the European Parliament’s vote in favour of CRD4 rules to cap variable pay for code staff in financial services firms is likely to lead to an increase in salaries.

Stephen Cahill, head of compensation and benefits at Deloitte, said:

“These new rules will profoundly change the way staff affected by the regulations will have to be paid, which at the moment is a relatively small number of individuals. We will have to see whether this will lead to changes in pay for other employees within the firms and potentially other industries, such as insurance, or if this will affect pay only for small groups of employees within firms that are in scope of the rules.

“The cap on variable remuneration is likely to lead to increases in salary levels across the sector and increase fixed costs at a time when firms are looking to keep them down. Firms might try to assess ways to limit the impact of fixed pay increases to, for example, ensure they do not flow to pension or termination payments.

“There remain many uncertainties and firms will potentially have to wait until March 2014 to see final guidelines released by the European Banking Authority. This will make it more difficult for firms to be ready when the regulations come into force from January 2014.  

“The lack of level playing field will make it particularly challenging for subsidiaries of European banks in the US and Asia.”


Notes to editors
About Deloitte

In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.


David Gwyer
Deloitte LLP
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