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Four Cypriot bankers earned on average €2m each in 2014, EBA says

The European Banking Authority said that four Cypriot bank executives earned an average €2m in 2014, a year after Cyprus’s banking crisis.

One executive had fixed remuneration of over €1,736,478 in 2014, was awarded a €358,306 in the form of variable remuneration (bonus), thus earning almost €2.2m, or €180,456 per month, on average, the report said. Three other bank executives had an average annual fixed remuneration of over €1.5m and earned in addition €282,302 in the form of variable remuneration on average each, or almost €2m a year.

The number of high earners in the Cypriot banking system was unchanged in 2014 compared to 2013. In 2012, there were three bankers in Cyprus whose overall annual remuneration exceeded €1m.

The European Banking Authority, tasked with ensuring “an effective and consistent level of prudential regulation and supervision” in Europe’s banking system, did not disclose the names of the bankers or the institutions they worked for. Its findings are included in its report headlined “Benchmarking of remuneration practices at the European Union level and data on high earners” on its website.

According to Bank of Cyprus’s 2014 annual report, the contract of the bank’s chief executive officer John Patrick Hourican provided for a fixed annual remuneration of €844,000 and no bonus, plus a €111,000 contribution to the bank’s retirement benefits scheme. The appointment of his Hellenic Bank counterpart Bert Pijls became effective in January 2015, after it was approved by the supervisor.

On average, high-earners’ income in Cyprus in 2014 was comparable to that of their British counterparts, who earned roughly €12,000 less, ranking them fourth and fifth respectively, the EBA said. Iberian high earners topped the list, with Spaniards earning almost €2.4m, followed by Portuguese with below €2.3m in total earnings in 2014. They were followed by their counterparts in Liechtenstein, who earned more than €2.1m in 2014.

By comparison, Germany’s 242 high earners received on average less than €1.7m in 2014, according to the report.

High earners in Greece, Croatia and Finland had the lowest earnings with €1m, €1.1 and €1.2m respectively, the EBA said.

In 2014, the number of high earners in the EU rose to 3,865 from 3,178 the year before, according to the EBA.

“This increase in numbers is mainly the result of the EBA’s regulatory technical standards on identified staff, which entered into force in 2014,” the EBA said. “These regulatory technical standards brought a more accurate definition based on qualitative and quantitative criteria, so as to allow for a better identification of those staff that have a material impact on the risk profile of institutions”.

The EBA added that the introduction of a bonus cap, limiting the ratio of variable and fixed remuneration to 1:1, or to 2:1 with shareholders’ approval, resulted in shifting remuneration towards fixed earnings. “As a result, the average ratio between the variable and fixed salary paid to identified staff was 65 per cent in 2014, down from 104 per cent in 2013,” the EBA said. “At the same time, the average ratio between the variable and fixed remuneration paid to high earners dropped from 317 per cent in 2013 to 127 per cent in 2014.

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